Beware! GEICO Marine Insurance for 1997 and older boats

[Wind River]

Originally Posted by Tessellate

My Geico Marine policy doesn't have the same partial loss statement you have, and my boat is a 1984. It looks like you may have an older policy text which is confusingly worded. Mine (2017, issued Dec-26-2016) is much clearer.

It's basically a pretty standard policy statement, saying depreciation is applied only to inflatable dinghies, outboard motors, etc. Ie, items that depreciate anyway. It does include gel coat too, which seems a little questionable, but I guess if I had really old gelcoat and got new gelcoat as part of a repair, that would be a cosmetic improvement.

Fiberglass doesn't appear to be subject to the depreciation clause - for that they say "reasonable cost of repair" and "like kind and quality."

You might want to call your agent to find out if you have an old policy doc.

Repairs for Partial Loss
We will pay the reasonable cost of repairs with depre-
ciation applied to the repair or replacement of the
following items: inflatable dinghies, paint and finishes
protective covers, fabric or sails. Depreciation shall also
apply to outdrive units, outboard motors and gel coat
beginning with the sixth year from the year of manufacture,
and to internal machinery beginning with the eleventh year
from the year of manufacture. In the event of damage
to plywood, plastic, fiberglass, metal, cement, or other
molded material, we are obligated to pay only the
reasonable cost of repairing the damaged area, in
accordance with quality marine repair practice. We have the
option to make or reimburse you for repairs or replacements,
or to pay you directly based on an agreed estimate of loss.
Repairs and replacements will be made with like kind and
quality.

The language I have is what came with my renewal (Aug/2017) and I did ask for a second copy to be emailed to me yesterday and it was the same.
It seems to me your policy language is a little more vague than mine as yours does not spell out what the depreciation is. Maybe it spells it out somewhere else in the policy though.

Did you go direct through GEICO or BoatUS? Maybe there is a difference there. I went through BoatUS.

[Wind River]

Originally Posted by Tetepare

Mine insurance contract with Geico (which I quoted from previously) is one month old.

Here is Geico's written response (bold):

If my boat is undeniably a total loss, how much will Geico pay? You have an agreed hull value policy, so if you have a total loss GEICO will pay the insured value of $40000 ( no deductible/ no depreciation)

What is the depreciation calculated against? The parts and materials ( not including labor)

What is the depreciation on my boat? Currently since your boat is 7 years past the 20th year of manufacturer, your depreciation would be 70%, however, the maximum depreciation is 80%. Claims does take into consideration the year and repair schedule of the part as well.

If my boat were to suffer $10,000 in damages, how much would Geico pay? We are unable to answer this hypothetical question without knowing the damages, what parts, etc. Claims looks at many factors when calculating the depreciation on a partial loss.

Back to my comments.

I have never changed the agreed value, part due to being lazy, part because of the fine condition of my vessel. The agreed value is $40,000. Actual market selling price is about $24,000.

Given that Geico discounts (I'm going to call it 80% because it'll be 80% in a few months) any repairs, that means for $10,000 in damage Geico would only pay out $2,000.

If the boat requires repair equal to the value of the boat, , I'm out a $24,000 boat for which Geico could claim as repairable and only cost Geico $4,800.

Since the agreed value is $40,000, technically I could have it repaired up to that value, meaning that Geico would pay only $8,000.

Clearly, getting Geico to claim a total loss would be very difficult unless the boat is a pile of molten plastic.

I gave a similar example to my agent and got a different answer. Using what they wrote to you, they would only depreciate the materials and not labor. I would think that most repairs are heavily weighted on the labor side of the repair unless we are talking about a damaged system such as an engine or rigging.

[RSB333]

For what it's worth, my BoatUS quote for the current year went up from last year's so I called and told them I had checked around and could get it for much less from Progressive. They not only lowered the premium, they took it down below last year's! I wonder if they knew that the coverage was now worth less and they could afford to cut the price in order to keep a customer.

[senormechanico]

Originally Posted by Tillerjockey

A little off topic here. I'm thinking of buying a 1966 Allied Seabreeze for about $25,000. I was discussing with the seller the need for me to get a survey before I could get insurance. He said that Boat US would insure without a survey. I thought he was making that up, but I asked Boat US for an insurance quote which they gave me one without a survey !! I was amazed and appalled. And they keep hounding me to sign up. I guess if they are not going to pay anything for a claim, any money they get is just money in the bank for them.

"It Riles Them to Believe That You Perceive the Web They Weave. And Keep on Thinking Free."

In the Beginning, On the Threshold of a Dream

by The Moody Blues

[Tetepare]

This from the Amica boat policy:

We will not apply depreciation, except for:
1. sails
2. protective covers of fabric or similar material
3. electronic equipment
4. batteries
5. outboard motors
6. tenders; or
7. dinghies

[Dave Lochner]

This afternoon my BoatUS/Geico policy arrived. Nice coincidence.

First thing I noticed is a premium increase, but it is still lower than the Seaworthy premium. Also, noticed that I no longer have a deductible.

On my policy, there is a "BoatUS Yacht Policy Endorsement" that clarifies "Total or Constructive Total Loss" provision. Basically it says if the cost of repairing the boat exceeds the Agreed Hull Value, the boat is a constructive total loss and they will pay the AHV. The also indicate that they may or may not want to take possession of the boat. So, keep the AHV as high as you can for as long as you can.

If you look in Paragraph 2, the items coverage are listed. This includes "hull, machinery, outboard motors, sails, spars, and furniture." Over on the next page, under Paragraph 5 Exclusions, it states that "immediate consequential property damage from any fire, explosion, sinking, dismasting, collision or stranding."

According to the agent I spoke with last year, the consequential damage clause would come in to effect, for example, in a dismasting where a shroud failed. The insurance would cover the mast and damage caused by the falling mast, but wouldn't necessarily cover the shroud. Or perhaps looking at the partial loss section, only cover the depreciated cost of the shroud. Similarly, if the boat sunk at the dock because of a failed seacock or hose, the seacock or hose would not be covered, but the damage caused by the seacock failing would.

Of course each incident will be fairly unique and the suggestion to keep good records is a wise one.

[svfinlandia]

Originally Posted by Dave Lochner

One paragraph out of the context of the entire contract is a bit difficult to really understand.

It might be that this paragraph defines what a total versus partial loss would be regardless of the AHV is. Thus the older a boat gets, the lower the threshold for totaling the boat.

Be interested in hearing what the insurance company says.

I, too have BOATUS/Geico insurance on my 30 year old boat and I would very much like to hear what they have to say!

Al, S/V Finlandia

[Colin A]

Originally Posted by Wind River

The language I have is what came with my renewal (Aug/2017) and I did ask for a second copy to be emailed to me yesterday and it was the same.
It seems to me your policy language is a little more vague than mine as yours does not spell out what the depreciation is. Maybe it spells it out somewhere else in the policy though.

Did you go direct through GEICO or BoatUS? Maybe there is a difference there. I went through BoatUS.

Sometimes policies vary from state to state. In the US states can require different policy language, some states for instance have readability rules where you have to be able to read the policy based on a grade reading level.

[Colin A]

Originally Posted by PuttingDoctor

But then if you have a complete loss you're under insured! The value of my agreed coverage now at $82k for a 1987 Irwin is about right where I want it to be. I would have to put up with all the nickel and dime deductions but I would at least have enough to replace her.

BTW the increase from 59k to 82k was $200 in annual premium. The Bahamas rider actually reduced the premium much to the surprise of even the GEICO rep I had the pleasure to work with last spring as I prepared for 2 months in the Abacos.

The over insured thing can be entertaining some companies allow it as they can charge more premium. Of course that can be a bit of an issue when the boat can be repaired for cash value but not for agreed value.

[svfinlandia]

Originally Posted by Wind River

So after a lengthy call with BoatUS they assured me that I was covered for more than it appeared to me.

The depreciation would apply to items on the boat such as the engine, rigging, sails, systems etc., if they are older than 20 years.

The example loss I asked about was and uninsured boater runs into my boat at the dock and does $20k of damage to my hull, railings and teak toe rail. I was assuming that they would depreciate all of that repair (in my case) by 80% since these are part of a 35 year old boat. Not so.
The line below the depreciation calculation explanation states "In the event of damage to plywood. plastic, fiberglass, metal, cement, or other molded materials, we are obligated to pay only the reasonable cost of repairing the damaged area......".

The depreciation comes in to play on covered losses such as a rigging failure or a damaged engine. If your 28 year old standing rigging fails and the mast comes down, they will only pay the depreciated value of it, not give you a brand new mast, sails and rigging...... BUT, if you have replaced these parts and can show they are not over 20 years old, they are covered without depreciation.
If you have a leak and your 27 year old engine is flooded and needs to be replaced, they are only paying 20% of the cost of it. So you are still open to having to pay a substantial amount in this type of case unless the engine has been rebuilt and you can prove this.

They said to keep all receipts for replacement of any part of your boat as that will be your proof to not have the depreciation applied to that part or equipment.

Still not great news but much better than I first thought.

Thanks for that Wind River. Just for the group's information, about 6 years ago I lost my whole rig - a ketch - both masts came down. I had BOATUS insurance (then Seaworthy) and they replaced both masts and all rigging with brand new (Seldon) at full cost. They did want to depreciate my then 23 year old original equipment jib that had a tear in it, but agreed to the full cost of having it repaired. The full cost of repair was just over 60K (US$) and the agreed hull value was (and still is) only 75K. Though it kept me off the water for a full boating season, I was very pleased with the results.
I wonder if Geico would do as well on my now 34 year old boat?

Al, S/V Finlandia

[Dave Lochner]

Originally Posted by Colin A

Sometimes policies vary from state to state. In the US states can require different policy language, some states for instance have readability rules where you have to be able to read the policy based on a grade reading level.

Good point. And more important check the policy to see which laws will govern the policy. The BoatUS/Geico policy specifies that the policy will be governed by US Admiralty laws first and state law only when Admiralty law doesn't apply.

This can be real important if any litigation arises.

[Capt Gill]

Originally Posted by Tessellate

My Geico Marine policy doesn't have the same partial loss statement you have, and my boat is a 1984. It looks like you may have an older policy text which is confusingly worded. Mine (2017, issued Dec-26-2016) is much clearer.

It's basically a pretty standard policy statement, saying depreciation is applied only to inflatable dinghies, outboard motors, etc. Ie, items that depreciate anyway. It does include gel coat too, which seems a little questionable, but I guess if I had really old gelcoat and got new gelcoat as part of a repair, that would be a cosmetic improvement.

Fiberglass doesn't appear to be subject to the depreciation clause - for that they say "reasonable cost of repair" and "like kind and quality."

You might want to call your agent to find out if you have an old policy doc.

Repairs for Partial Loss
We will pay the reasonable cost of repairs with depre-
ciation applied to the repair or replacement of the
following items: inflatable dinghies, paint and finishes
protective covers, fabric or sails. Depreciation shall also
apply to outdrive units, outboard motors and gel coat
beginning with the sixth year from the year of manufacture,
and to internal machinery beginning with the eleventh year
from the year of manufacture. In the event of damage
to plywood, plastic, fiberglass, metal, cement, or other
molded material, we are obligated to pay only the
reasonable cost of repairing the damaged area, in
accordance with quality marine repair practice. We have the
option to make or reimburse you for repairs or replacements,
or to pay you directly based on an agreed estimate of loss.
Repairs and replacements will be made with like kind and
quality.

A real time issue re. the new deductible clause. The boat is a 1984, launched in 1986 in excellent condition prior to the claim.
My ongoing case with GEICO: I have included the pertinent parts the 2016 and the renewal for 2017, apparently they want to deduct 80% from virtually all materials most of which are f/g and related. I'm talking with my broker regarding this, so more later.

[Rorzech]

All Insurance companies in the world are owned by one owner at the top of the pyramid.

[ramblinrod]

Originally Posted by Wind River

Since my 1982 Hudson Force 50 will be on the hard for a couple years for extensive work, I was searching for options to insure it. I am mostly concerned with unlikely events such as fire and the boat falling off the stands as sinking or running into other boats are even more unlikely, given its dry location at my business. I thought there would be a significant discount because of this. Not so apparently.

Currently i am insured with BoatUS/GEICO and my premiums jumped up about 40% over last year with no claims. In my search for new insurance I was presented with the fact that without a new survey, no one else would insure me. My boat is not in very presentable condition with the rig down and many parts being taken apart to be repaired so I can't imagine a new survey doing me any favors in the value of my boat.

It was suggested by a nice insurance broker that I just stay with GEICO and pay what they are asking and have it surveyed after the refit is complete. Then I would have many more options of who to insure with. When we were discussing the risk of not having it insured at all, she let me in on a little know policy change that GEICO has done this year that I think impacts a lot of people.

In my scenario of my boat toppling off the stands, I doubt with the amount of fiberglass they used on this boat it would be a total loss. This is where the problem comes in. In the "Partial loss" area of the policy, it has been changed to read that after 20 years of age, they will depreciate the amount they will pay by 10%/year not to be less that 20% of the repair.

In my case, that would mean they will pay 20 cents on the dollar for the repair leaving me with the other 80%.
I have an "Agreed Hull Value" policy but unless I have a total loss it looks like I really have a 20% hull value policy. This seem criminal not to have spelled this change out clearly in the renewal. It was only by chance that I found out about it. This shows the very real value of having an insurance broker. She told me that GEICO did not even tell them what changed in their policies, only that there was a change. They had to figure it out for themselves.

If you have a 1997 or older boat and have GEICO insurance (BoatUS) you need to know this.

Every marine insurance policy is like this.

What do you expect?

If you have a 30 year old boat, and forget to open the seawater intake, the insurance company should install a brand new diesel at no cost to you?

Why on earth would they do that?

You didn't have a new one before, why should you have a new one after?

Cripes, I'm impressed that they will give you a new one for toasting a 19 year old one.

Would you want to pay so much in insurance premiums that should you wreck something old on your old boat you would get a brand new one?

If you could afford that much in insurance premiums, surely you could just buy the new boat and enjoy it without having to wreck it?

What this results in is an increasing deductible to replace parts with new, dependant on age. Makes perfect sense to me.

Otherwise, everyone with 30 year old sails would be making insurance claims to get brand new ones at no cost.

[Wind River]

Originally Posted by ramblinrod

Every marine insurance policy is like this.

What do you expect?

If you have a 30 year old boat, and forget to open the seawater intake, the insurance company should install a brand new diesel at no cost to you?

Why on earth would they do that?

You didn't have a new one before, why should you have a new one after?

Cripes, I'm impressed that they will give you a new one for toasting a 19 year old one.

Would you want to pay so much in insurance premiums that should you wreck something old on your old boat you would get a brand new one?

If you could afford that much in insurance premiums, surely you could just buy the new boat and enjoy it without having to wreck it?

What this results in is an increasing deductible to replace parts with new, dependant on age. Makes perfect sense to me.

Otherwise, everyone with 30 year old sails would be making insurance claims to get brand new ones at no cost.

The scenario you are presenting never even crossed my my mind. If I didn't open a sea water intake and toasted my engine my first call would be to BoatUS Towing for which I bought Unlimited Gold Towing policy for any scenario I needed them for to get my boat back home. The next call would be to American Diesel to find out how much the rebuild parts would cost ME. I wouldn't even have thought to ask for a new engine from my insurance company but I agree with you on this point. If they did provide coverage for this, it should be depreciated, but if I had a new engine in my 35 year old boat, I would expect that they would install a like engine (if that was a covered loss) without depreciation. That is what I was told they would do as long as I had proof of the new engine.

My concern was that if something happened to my boat, such as fire or an uninsured boater causing damaged to my boat, that my policy would only cover 20% of the cost of the repair because of its age. So, yes, in this example I would expect the boat to be restored back to as good of condition as it was before without depreciation.

I have an agreed value policy on my boat. My assumption was that if my boat was damaged by me or someone else, my insurance company would pay to repair my boat up to the insured amount. It was brought to my attention by an insurance agent that this was not the case and that only 20% of the cost would be covered. That was shocking to me!

Since then, I have had this clarified by BoatUS and my concern that only 20% of a repair would be covered has been shown to be incorrect. This was the point of this post and by the reaction of most, there was a valid concern about this depreciation how it applied to partial repairs. At this point some are still saying that the materials used in the repair will be depreciated. That is also a concern to me and I hope by the time this post is dead that will be clarified also. My BoatUS agent said nothing about depreciating materials for repair. I will be making another call about that.